Periodic newsletter on Energy Markets, Energy Efficiency and Policy Issues

1. Hill Energy Services – Energy Intelligence Update March 12, 2009
www.Hill-Energy.com
• Prices for crude oil and petroleum products are up somewhat
2008-09 Wholesale Crude Oil & Diesel Prices from their New Year’s lows, but they haven’t really been able to
gain any traction. Prices have been pushed up slightly by
$125 $3.50
OPEC’s efforts to reduce its members’ oil production. Given
$115
OPEC’s inability to keep its members in line, this is not likely to
$3.00
have much of an impact. The economy continues to be the
$105
driving force behind low worldwide energy costs. Some have
$95 speculated that this winter’s heavy use of oil for heating
$2.50
(particularly in Europe) could be masking an even lower industrial
$-Barrel Crude
$85
demand for oil. If this is true, we may see further price drops.
$-Gallon
$75 $2.00
• Most Americans don’t need a graph to know that the price of
`
gasoline has been creeping upwards in recent weeks.
$65
Surprisingly, people are driving more this year than last, and
$1.50
$55
gasoline consumption is up. US stockpiles of every petroleum
product except gasoline are well above the five-year average.
$45
$1.00
Gasoline stocks are slightly below average. Supply and demand,
$35
with a dose of fear, are driving oil prices.
$25 $0.50
• Natural gas prices aren’t even showing the sluggish stability of
t v r
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p b oil. Prices have not been this low since November 2002 and
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there are no factors on the horizon that suggest they will be rising
Crude Diesel Gasoline
soon. It’s foolish to try and pick the bottom of the market, but the
next few weeks look as if they will be a good time to lock some of
NYMEX Natural Gas Futures Pricing your natural gas pricing.
$16
2008 defined the non-Katrina
Average Energy Costs – March 12, 2009
market highs
$14
This Week Last Month Last Year
Retail Diesel $2.17 /gal. $2.35/gal $3.88 /gal
$12
Retail Gasoline $1.93/gal. $1.93/gal. $3.25/gal
$10
Crude Oil $ 41.83/bbl $35.93/bbl $107.90/ bbl
Natural Gas $0.380/thm $0.453/thm $1.02 /thm
$8
Sources: US Dept. of Energy, EIA; AAA/OPIS
$6
Hill Energy Services
$4 We provide commercial and industrial customers with a full range of tools to help
2009 has seen the lowest market prices since 2002 them manage both their energy usage and costs. These services include
strategic energy planning and procurement as well as making buildings systems
$2 and processes more efficient.
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Ma Ap Ma No De
Ja Ju Au Se
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6-yr Min 6-yr Max 2008 2009
Disclaimer: This information is provided for the convenience of our customers and potential customers. Hill Energy Services LLC assumes no responsibility or liability for the information in this document. Historical data was obtained from sources believed to be
reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. This document may not be reproduced without the specific written permission of Hill Energy Services LLC.

2. Hill Energy Services – Energy Intelligence Update March 12, 2009
www.Hill-Energy.com
The Economic Stimulus and Energy
The energy industries – efficiency and production – have been among the many targets
tucked into the recent economic stimulus bill. (Energy is slated for $50 billion, or 6%, of
the spending.) This doesn’t mean that all of us in the energy business are now on easy
street, but it does raise the profile of these activities. What follows is a brief discussion
of various aspects of energy that are affected by the stimulus and other US legislation:
The Stimulus package includes almost $15 billion for Energy Efficiency. Most of this
comes in the form of “shovel ready” energy upgrades to low- & moderate-income
housing, schools and government buildings. The idea is that these projects will
decrease energy costs and usage while providing jobs in construction, materials
manufacturing and other areas.
The Smart Grid: Everyone says they want it, it’s getting $15.5 billion in the Stimulus, but
what is it? The current electric power transmission system – the grid – is an
engineering marvel, but much of the technology is grounded in mid-20th century Most Americans won’t be surprised to learn that the current winter has
technology. The regional power grids (and the people who manage them) bring been colder than normal. Heating degree-days have been 5 to 15%
electricity from central power plants to end-users. The system is set up to always meet above normal. Surprisingly, we often see high heating bills during the
customers’ power requirements and electrical power demand. The smart grid concept months following a cold winter. When warm weather finally comes to
seeks to take advantage of digital technology and modernize the transmission lines, the Frozen North, people will open doors and windows, while leaving
local distribution wires and electric meters. One goal is to improve the reliability and the heat on. Many times heating systems are left on longer than in a
safety of the system, reducing the risk of events like the 2003 Northeast blackout, normal winter, resulting in abnormal heating bills for April and May. The
which was caused by a snowballing of failures. It would also change the grid from a bottom line – turn the heat down or off in the Spring. You don’t need a
one-way power distribution system (power plant to customer) to a two-way network smart meter to tell you that.
(customer-generated energy from solar, cogeneration, etc. going into the grid and back
to other customers). This would include better tools for managing electrical use, such
as giving small commercial and residential customers advanced electrical meters and
software so that they could “tweak” their electrical consumption in response to price
and other signals. The smart grid idea also encompasses the construction of new
transmission lines from (often rural) areas with renewable energy resources like wind
and solar to population centers.
The Smart Grid isn’t a cure-all; obviously there are a lot of companies pushing their
solution for inclusion. The concepts of the “smart house” and the “smart building” have
been around for a long time. We need better tools to make it easier for consumers to be The plummeting natural gas costs
“smart people”. If teenagers can update their Facebook pages from their phones, the of the past 6 months are showing
rest of us should be able to fine tune our energy use via smarter electric meters. up in falling electricity prices, as shown
here by the PJM system prices.
Disclaimer: This information is provided for the convenience of our customers and potential customers. Hill Energy Services LLC assumes no responsibility or liability for the information in this document. Historical data was obtained from sources believed to be
reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. This document may not be reproduced without the specific written permission of Hill Energy Services LLC.